Payroll - Procedure 20319b

Procedure 20319b: Salary Overpayment

Contacts and revision dates:

Overview: 

Salary overpayments may occur if a department does not promptly notify Human Resources of an employee’s separation or provides delayed or inaccurate information. In such cases, the employee will be billed for the excess pay. Overpayments cannot be charged to federally funded or sponsored project accounts; charges will be moved to the department’s overhead fund.

Repayment 

When an overpayment is identified, Human Resources notifies Payroll. Payroll then initiates the collection process in accordance with Department of Accounts (DOA) guidelines. Repayment requirements vary depending on whether the overpayment is corrected within the same calendar year or in a subsequent year, with different tax and reporting implications.

Repayment arrangements must comply with federal and state wage laws. Deductions cannot reduce an employee’s pay below minimum wage. Repayment can be made through:

• Payroll withholding from future payments, or
  
• A repayment agreement with the Bursar’s Office (finance fees may apply).

Collection Process

When Payroll receives a separation notice that results in an overpayment, the employee is sent a letter requesting repayment. If repayment is not made through payroll deduction, Payroll prepares a charge form and forwards the information to the Bursar’s Office to establish an accounts receivable.  

Once repayment is received, the amount is recorded as an expenditure refund to the fund and account, or to the overhead fund if the charge was moved from a sponsored fund.

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